Shri Ravindrasingh M. Rathod, Baroda V. The Income Tax Officer, Ward-2(2), Baroda

MA 117/AHD/2014

• Counselvise Citation: [2016] 124 COUNSELVISE.COM (IT) 4172 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 9 month(s) 11 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 02-05-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 16-10-2015
• Assessment Year: 2004-2005
• Appeal Filed On: 22-07-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: NARENDRA SINGH
• Keywords: Unexplained cash credit; Corroborative evidences
• Section: 142(1); 68

Judgement Text

, C IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD BEFORE SHRI PRAMOD KUMAR, ACCOUNTANT MEMBER AND SHRI RAJPAL YADAV, JUDICIAL MEMBER MISC. APPLICATION NO.117/AHD/2014 IN ./ ITA NO.1407/AHD/2010 / ASSTT.YEAR: 2004-2005] RAVINDRASINGH M. RATHOD PROP. PARAGON ENTERPRISES 27, GIDC ESTATE NANDESARI, BARODA. VS ITO, WARD - 2(2) BARODA. ( APPLICANT ) (RESPONDENT) ASSESSEE BY : SHRI ANIL R. SHAH WITH MS.KINJAL SHAH REVENUE BY : SHRI NARENDRA SINGH, SR.DR / DATE OF HEARING : 01/04/2016 / DATE OF PRONOUNCEMENT: 02/05/2016 *+/ O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: THE PRESENT MISC. APPLICATION IS DIRECTED AT THE IN STANCE OF THE ASSESSEE POINTING OUT AN APPARENT ERROR IN THE ORDE R OF THE TRIBUNAL IN ITA NO.1407/AHD/2010 DATED 16.9.2013. 2. IT IS PLEADED IN THE APPLICATION THAT THE AO HAS MADE TWO ADDITIONS OF RS.4,81,650/-. ONE ADDITION WAS MADE IN PARA 5.2 OF THE ASSESSMENT AND SECOND ADDITION HAS BEEN MADE IN PAR A 6.4 OF THE ASSESSMENT ORDER. ONE REPRESENTS UNEXPLAINED CASH CREDIT AND OTHER REPRESENTS CAPITAL GAIN. THE TRIBUNAL WHILE DEALIN G WITH GROUND NO.3 MA NO.117/AHD/2014 2 RAISED BY THE ASSESSEE HAS ASSUMED THAT THE ISSUE A GITATED BY THE ASSESSEE REPRESENTS CAPITAL GAIN WHICH HAS ALREADY BEEN DELETED BY THE LD.CIT(A), AND THEREFORE, TREATED THE GROUND AS IN FRUCTUOUS. THE LD.COUNSEL OF THE ASSESSEE CONTENDED THAT IN THIS W AY, THE TRIBUNAL HAS COMMITTED APPARENT ERROR. 3. WE HAVE DULY CONSIDERED RIVAL CONTENTION AND GON E THROUGH THE RECORD CAREFULLY. THE FINDING OF THE TRIBUNAL ON T HIS ISSUE READS AS UNDER: 7. REGARDING GROUND NO.3, IT WAS SUBMITTED BY THE LD.AR OF THE ASSESSEE THAT THIS AMOUNT OF RS.4,81,650/- IS NOT O N ACCOUNT OF CASH CREDIT BUT ON ACCOUNT OF CREDIT PURCHASE OF MA TERIALS AND, THEREFORE, NO SUCH ADDITION IS JUSTIFIED U/S.68 OF THE IT ACT. IN THIS REGARD, WE WOULD LIKE TO OBSERVE THAT ON THE PREVIO US DATE OF HEARING, I.E. 21.8.2013, THE SAME COMBINATION WAS H EARING THE MATTER AND THE HEARING WAS ADJOURNED FOR THIS REASO N ALONE THAT THE AMOUNT STATED BY THE ASSESSEE IN THIS GROUND IS ACTUALLY THE AMOUNT OF SUCH DISALLOWANCE WHICH WAS DELETED BY TH E LD.CIT(A) AS PER PARAGRAPH NO.6.2 OF HIS ORDER AND, THEREFORE , THE HEARING WAS ADJOURNED TO ENABLE THE ASSESSEE TO RECTIFY THE GROUND. THEREAFTER, THE ASSESSEE HAD FILED A REVISED-CUM-AD DITIONAL GROUNDS OF APPEAL ALSO ON 30/08/2013 IN WHICH THE A SSESSEE HAD SUBMITTED THAT THE AMOUNT OF RS.4,81,623/- ADDED BY THE AO AND CONFIRMED BY THE LD.CIT(A) U/S.68 OF THE ACT IS NOT JUSTIFIED BUT ON THE DATE OF FINAL HEARING, I.E. ON 10.09.2013, IT W AS SUBMITTED BY THE LD.AR OF THE ASSESSEE THAT THIS REVISED-CUMADDI TIONAL GROUNDS OF APPEAL ARE NOT PRESSED AND WITHDRAWN. SIMILARLY, IN THE ORIGINAL GROUNDS OF APPEAL FILED BY THE ASSESSEE ALONG WITH APPEAL MEMO DATED 13/04/2010, THE AMOUNT IN DISPUTE AS PER GROU ND NO.III(1) WAS STATED TO BE RS.5,85,263/- BUT THESE GROUNDS WE RE ALSO WITHDRAWN BY THE LD.AR OF THE ASSESSEE AND HE REQUE STED US TO DECIDE THIS APPEAL AS PER CONCISED GROUND OF APPEAL DATED 11/02/2013. IN GROUND NO.3 OF SUCH CONCISED GROUNDS OF APPEAL AS REPRODUCED ABOVE, THE ASSESSEE IS DISPUTING THE ADDITION OF RS.4,81,650/-. WE HAVE SEEN THAT THE ADDITION OF TH IS AMOUNT OF RS.4,81,650/- WAS MADE BY THE AO AS SHORT-TERM CAPI TAL GAIN AND THE SAME WAS DELETED BY THE LD.CIT(A) AS PER PARAGR APH NO.6.2 OF HIS ORDER. SINCE THE ADDITION OF THIS AMOUNT OF RS. 4,81,650/- IS ALREADY DELETED BY THE LD.CIT(A), THIS GROUND NO.3 OF THE ASSESSEES CONCISED GROUND OF APPEAL IS MISCONCEIVE D AND IT APPEARS THAT THE ASSESSEE HAS WRONGLY MENTIONED THE SECTION 68 MA NO.117/AHD/2014 3 OF THE ACT WITH REGARD TO THIS AMOUNT OF ADDITION O F RS.4,81,650/- AND FOR THIS REASON, THE ASSESSEE WAS UNDER WRONG I MPRESSION THAT THIS ADDITION WAS UPHELD BY THE LD.CIT(A). SIN CE THE ADDITION OF RS.4,81,650/- IS ALREADY DELETED BY THE LD.CIT(A ), THIS GROUND NO.3 OF THE ASSESSEES CONCISED GROUND OF APPEAL DO ES NOT ARISE OUT OF THE ORDER OF THE LD.CIT(A) AND, HENCE, THE S AME IS REJECTED. 4. THE DISCUSSION MADE BY THE AP IN PARA 5 TO 5.2 I S WORTH TO NOTE. IT READS AS UNDER: 5. ON VERIFICATION OF BALANCE SHEET OF PARAGON ENT ERPRISE INDUSTRIES, IT FOUND THAT THERE WAS AN ADDITION OF RS. 8,04,878/- IN THE CAPITAL ACCOUNT OF THE PROPRIETOR DURING THE YE AR. AS PER NOTICE U/S. 142(1) DATED 24-10-2006 ASSESSEE WAS SPECIFICA LLY ASKED TO EXPLAIN THE SOURCE OF FRESH CAPITAL BROUGHT IN THE CAPITAL ACCOUNT WITH SUPPORTING EVIDENCES. VIDE VARIOUS ORDER SHEET S NOTINGS THE ASSESSEE WAS ASKED TIME AND AGAIN TO GIVE PROPER EX PLANATION TO THE CREDIT ENTRIES IN THE CAPITAL ACCOUNTS WITH PRO OF AND THAT IN CASE ANY CREDIT ENTRY HAS COME FROM ANY THIRD PARTY , PROPER CONFIRMATION WITH PAN AND SOURCE OF THE AMOUNT BE E XPLAINED. BUT ASSESSEE HAS NOT SUBMITTED ANY EXPLANATION WITH DOCUMENTARY EVIDENCES AS REQUIRED. FINALLY | SHOW C AUSE NOTICE DATED 22-12-2006 WAS ISSUED TO THE ASSESSEE WHEREIN HE WAS ASKED TO SUBMIT THE ABOVE DETAILS, 5.1 THE ASSESSEE, IN RESPONSE TO THE SHOW CAUSE NOT ICE, VIDE HIS LETTER DATED 26-12-2006, REPLIED AT POINT NO. 9 THA T THE SOURCE OF CAPITAL AND EXPLANATION IS AS UNDER:- THE DETAILS OF FIXED ASSET ALONG WITH ADDITION ALRE ADY SUBMITTED TO YOU. THE SOURCE OF CAPITAL AND EXPLANATIONS AS UNDE R IN THE CAPITAL ACCOUNT, THE ASSETS PURCHASED BY FIRM BY MI STAKE CREDITED RS, 4,81,650/- BY VARIOUS BILLS OF FIXED ASSETS TO THE CREDIT OF PROPRIETOR CAPITAL ACCOUNT INSTEAD OF PARTY'S ACCOU NT AND SAME HAS BEEN SHOWN AS WITHDRAWN WHEN PAYMENT MADE TO SUCH P ARTY IN PROPRIETOR'S CAPITAL ACCOUNT. IN FACT ONLY PAYMENT MADE FROM PERSONAL ACCOUNT OF S.B. PASSBOOK WHERE PROPRIETOR HAS TAKEN PERSONAL LOAN FROM PARTIES AND FROM WHICH PAYMENTS MADE TO FIXED ASSETS (BUILDING) ONLY BY WAY OF ADDITION TO CAPITAL, AND SOURCE OF SUCH CAPITAL ALONG WITH SUPPORTING DOCUME NTS IS ENCLOSED AS PER ANMXURE-4. MA NO.117/AHD/2014 4 THE NET ADDITION TO CAPITAL & ITS SOURCES IS EXPLAI NING ABOVE ANNEXURE-4. 5.2 THE ABOVE REPLY OF THE ASSESSEE WAS CAREFULLY C ONSIDERED AND NOT FOUND TO BE FACULTY CORRECT. IN THIS REGARD IT IS MENTIONED THAT ASSESSEE HAS CLAIMED TO HAVE ENCLOSED SUPPORTING DO CUMENT FOR ADDITION TO CAPITAL BUT NO SUCH DOCUMENT WERE FOUND TO BE ENCLOSED. THIS FACT HAS BEEN STATED TO THE ASSESSEE ALSO. ON VERIFICATION OF THE ABOVE, IT IS FOUND THAT TO EXPL AIN THE SOURCE OF ADDITION IN THE CAPITAL ACCOUNT ASSESSEE HAS CLAIME D THAT HE HAS INVESTED RS. 4,81,650/- FOR ADDITION IN FACTORY BUI LDING DURING THE YEAR OUT OF HIS PERSONAL SOURCES. IN SUPPORT OF THI S CLAIM, ON 28.12.2006 ASSESSEE SUBMITTED COPY OF SOME BILLS. P ERUSAL OF THESE BILLS REVEAL THAT COMPLETE DETAILS WERE NOT S UBMITTED AND WHATEVER BILLS ETC. WERE SUBMITTED WERE EITHER FOUN D TO BE WITHOUT ANY NAME, DATE OR THEY ARE NOT IN THE NAME OF ASSESSEE. SUBSEQUENTLY, VIDE HIS REPLY DATED 28.12.2006 ASSES SEE HAS GIVEN A STATEMENT OF CAPITAL ACCOUNT OF SHRI R.M. RATHOD I.E. ASSESSEE HIMSELF, MARKED AS 'ACTUAL CAPITAL ACCOUNT'. WHAT D OES THIS ACTUAL CAPITAL ACCOUNT' MEANS IS NOT CLEAR. MEANING THEREB Y THAT WHATEVER CAPITAL ACCOUNT OR DETAILS WERE SUBMITTED BEFORE THIS CAPITAL ACCOUNT WERE NOT ACTUAL OR CORRECT. VERIFICATION OF THIS ACCOUNT REVEALED THAT THE ASSE SSEE HAS GIVEN DESCRIPTION OF DEBIT ENTRIES BEING PAYMENT/WI THDRAWAL MADE FROM THIS ACCOUNT AND CREDIT ENTRIES BEING AMOUNT I NTRODUCED IN THIS ACCOUNT BUT ASSESSEE HAS NOT GIVEN ANY SUPPORT ING DOCUMENT WITH THIS ACCOUNT. MOST OF THE ENTRIES ARE IN CASH. FROM WHERE THE SAID CASH HAS COME AND WERE CASH HAS GONE FROM THIS ACCOUNT NOTHING HAS BEING SUBMITTED BY THE ASSESSEE IN THIS REGARD. FURTHER, ON EXAMINATION OF THE SO CALLED CAPITAL AC COUNT IT IS FOUND THAT HOW THIS CAPITAL ACCOUNT WAS PREPARED IS NOT C LEAR. MANY OF THE ENTRIES ARE NOT TALLYING WITH WHATEVER SUPPORTI NG DOCUMENTS WERE SUBMITTED IN THIS REGARDS. IT SEEMS THAT ASSES SEE HIMSELF IS UNABLE TO UNDERSTAND AND EXPLAIN THE ENTRIES OF CAP ITAL ACCOUNT. THIS VIEW IS STRENGTHEN BY THE FACT THAT ASSESSEE H IMSELF HAS GIVEN EXPLANATION OF ADDITION IN CAPITAL ACCOUNT IN PIECEMEAL. THE CAPITAL ACCOUNT IS NOT MAINTAINED STRICTLY AS PER T HE ACCOUNTING STANDARD. SO IN ABSENCE OF PROPER AND COMPLETE SUPPORTING DOCUMENTARY EVIDENCES THE CLAIM OF THE ASSESSEE FOR ADDITION OF RS. 4,81,650/- IN HIS CAPITAL ACCOUNT IS NOT FOUND TO BE IN ORDER & GENUINE AND IS HEREBY REJECTED. MA NO.117/AHD/2014 5 5. A PERUSAL OF BOTH THESE FINDINGS WOULD INDICATE THAT THE TRIBUNAL HAS COMMITTED APPARENT ERROR WHILE DEALING WITH THE ISSUE. THE TRIBUNAL FAILED TO TAKE NOTE OF THE FACTS REPRESENT ING THE ADDITION MADE ON ACCOUNT OF UNEXPLAINED INTRODUCTION OF CAPITAL. THEREFORE, WE RECALL THE FINDING OF THE TRIBUNAL ON GROUND NO.3 AND REST ORE THE APPEAL TO ITS ORIGINAL NUMBER IN ORDER TO ADJUDICATE THE GROUND N O.3 AFRESH. 6. IN THE RESULT, THE MISC. APPLICATION OF THE ASSE SSEE IS ALLOWED. ORDER PRONOUNCED IN THE COURT ON 2 ND MAY, 2016 AT AHMEDABAD. SD/- SD/- (PRAMOD KUMAR) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER